The best tax deductions for LLC owners in 2026 include the now-permanent 20% qualified business income (QBI) deduction, 100% bonus depreciation and a $2,560,000 Section 179 limit, the 72.5-cent mileage rate, retirement plan contributions of up to $72,000, the home office deduction and self-employed health insurance. How you claim them depends on whether your LLC is taxed as a sole proprietorship, a partnership or an S corporation. This guide covers each deduction, the 2026 numbers and the mistakes to avoid.
Tax Deductions for LLC Owners at a Glance
| Deduction | 2026 figure or rule |
|---|---|
| QBI deduction | Up to 20% of qualified business income; thresholds $201,750 single / $403,500 joint; $400 minimum with $1,000+ of QBI |
| Section 179 | Up to $2,560,000, phasing out above $4,090,000 of purchases |
| Bonus depreciation | 100% for qualifying property acquired after January 19, 2025 |
| Standard mileage rate | 72.5 cents per business mile |
| Solo 401(k) total limit | $72,000 (plus catch-ups); $24,500 employee deferral |
| Self-employment tax deduction | Half of self-employment tax, above the line |
| Self-employed health insurance | Premiums for you, your spouse and dependents, up to net profit |
| Home office (simplified method) | $5 per square foot, up to 300 square feet |
1. The Qualified Business Income Deduction
Owners of LLCs taxed as sole proprietorships, partnerships or S corporations can deduct up to 20% of qualified business income. The One Big Beautiful Bill Act made the deduction permanent, widened the phase-in ranges to $75,000 (single) and $150,000 (joint), and added a $400 minimum deduction for owners with at least $1,000 of QBI from a business they materially participate in. See our guide to the QBI deduction for 2026.
2. Equipment: Section 179 and Bonus Depreciation
Computers, machinery, furniture, off-the-shelf software and qualifying vehicles can be fully deducted in the year placed in service. Section 179 is limited to business income, while bonus depreciation can create a loss. See 2026 Section 179 rules and bonus depreciation in 2026.
3. Vehicle Expenses
Deduct 72.5 cents per business mile in 2026, or actual costs plus depreciation. Heavy SUVs and trucks used more than 50% for business can often be written off in the first year. Keep a mileage log. Our business vehicle deduction guide compares the two methods.
4. Retirement Plan Contributions
- Solo 401(k): As the employee, defer up to $24,500 ($32,500 at 50+, $35,750 at 60-63). As the employer, add a profit-sharing contribution. The combined total is capped at $72,000, not counting catch-ups.
- SEP IRA: Employer contributions of up to 25% of compensation (about 20% of net self-employment earnings for sole proprietors), also capped at $72,000.
- SIMPLE IRA: $17,000 employee deferral for 2026, plus catch-ups, with a required employer match or contribution.
These contributions lower income tax, and for S corporation owners, contributions based on W-2 wages also need to be planned with payroll. See 401(k) contribution limits for 2026.
5. Home Office
If you use part of your home regularly and exclusively as your principal place of business, you can deduct it. The simplified method allows $5 per square foot, up to 300 square feet ($1,500). The regular method deducts the business share of rent or mortgage interest, utilities, insurance, repairs and depreciation. S corporation owners usually handle this through an accountable plan reimbursement. See the home office deduction.
6. Self-Employed Health Insurance
Single-member and partnership LLC owners can deduct health, dental and qualified long-term care premiums for themselves, a spouse and dependents above the line, up to net business profit, as long as they are not eligible for an employer-subsidized plan. S corporation owners with more than 2% ownership can take the deduction if the premiums are included in their W-2 wages.
7. Half of Self-Employment Tax
LLC owners taxed as sole proprietors or partners pay 15.3% self-employment tax on 92.35% of net earnings (Social Security tax applies up to $184,500 in 2026). Half of the tax is deductible above the line. See how self-employment tax works.
8. Ordinary Business Expenses
Everyday costs are some of the most overlooked tax deductions for LLC owners. If an expense is ordinary and necessary for your business, it is generally deductible, including:
- Software, subscriptions and cloud services
- Advertising, website and marketing costs
- Professional fees for accountants and attorneys
- Business insurance
- Business travel, plus 50% of qualifying business meals
- Phone and internet, business-use share
- Startup costs: up to $5,000 deductible in the first year, with the rest amortized over 15 years
Should Your LLC Elect S Corporation Status?
An S corporation election does not change the deductions above, but it can reduce self-employment tax. Owners pay themselves a reasonable salary subject to payroll tax and take the rest of the profit as distributions that are not subject to Social Security and Medicare tax. The trade-off is payroll costs, a separate business return, and the fact that S corporation wages are not QBI. See how much S corporation owners should pay themselves and IRS Form 2553.
Example: Stacking Tax Deductions for LLC Owners
A single-member LLC consultant has $150,000 of revenue and $20,000 of ordinary expenses, for $130,000 of Schedule C profit before vehicle, home office and equipment. She deducts $8,700 for 12,000 business miles, $1,500 for a home office and $4,000 for a new computer, bringing profit to $115,800. She then contributes to a solo 401(k), deducts half of her self-employment tax and her health insurance above the line, and takes the QBI deduction on what remains. Each layer cuts her taxable income further.
Common Mistakes
- Mixing personal and business expenses in one account.
- Claiming a home office that is not used exclusively for business.
- Waiting until tax time to set up a retirement plan. Deadlines differ by plan type and contribution type, so set it up before year-end when possible.
- Taking S corporation distributions without paying a reasonable salary.
- Skipping quarterly estimated taxes on LLC profits.
Frequently Asked Questions
What can an LLC owner write off in 2026?
Ordinary and necessary business expenses, vehicle costs, equipment, a home office, retirement contributions, health insurance, half of self-employment tax and the QBI deduction, among others.
Do LLC owners get the QBI deduction?
Yes, if the LLC is taxed as a sole proprietorship, partnership or S corporation. It is up to 20% of qualified business income, subject to limits at higher incomes.
Can an LLC deduct a vehicle purchase?
Yes. Vehicles used more than 50% for business can qualify for Section 179 or bonus depreciation, with caps for passenger cars and heavy SUVs.
Is it worth electing S corporation status?
Often when profit is high enough that self-employment tax savings exceed the extra payroll and filing costs. A CPA can run the comparison.
Final Thoughts
The best tax deductions for LLC owners are the ones you plan for during the year, not at tax time. Track mileage, set up a retirement plan, keep business and personal finances separate, and review whether your LLC’s tax classification still fits.
Have questions about how this applies to your situation? Book a free consultation with Aric and get answers from a CPA.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
